2010-2012 Netflix Financials

The Evolution of the Netflix EmpireNetflix has quickly become a household name by saturating the market with a new age way to rent movies. Established in 1998, Netflix geared its business to provide consumers with quick and easy access to their favorite movies without the need to leave their homes. As the business developed and other popular sites, such as YouTube, began to gain popularity Netflix entered the market of streaming online content. During the infancy of their instant service Netflix still relied heavily on mailing DVDs to offer their customers a wider range of movies and TV shows. However, as their steaming library grew the mindset of the company began to shift. As they transitioned away from their mailing movies, key business decisions were made that caused many to question the future of the company. The adaptation of Netflix into the era of instant movie viewing can best be described by analyzing the time period from 2010-2012.

The “Video Store” EraFrom early 2010 to the close of the year, Netflix saw growth across many aspects of the company, including stock price, profit, and subscribers. As shown in the stock price graph below, Netflix’s per share value increased from approximately $53 to $175, an increase of more than 200%. This can be attributed to a growth in popularity as the company attracted nearly 8 million new subscribers, which led to $2.1 billion in total revenue as seen on the income statement. Continuing with the same report, accounting for the cost of goods sold, Netflix had a gross profit of $805 million, leading to a net income of roughly $160 million. Looking at the statement of cash flows for the year, there are a few major components that stand out. Over the course of the year, they bought back about $90 million dollars worth of their own stock. This makes sense due to the large increase in price. It would have been a safe move to invest in themselves and keep their cash internal. This pairs with the investments section of roughly 30 million, substantially different have the coming years. These compared with the net income mentioned above led to a change in cash flow of $60 million, again less significant than in the coming years. From the balance sheet, total liabilities were $692 million. The largest portion of this was Current Content Liabilities ($169 million), or the money that they had to pay to copyright holders to have access to their products and long term debt ($200 million). Total shareholder equity was $290 million. Publicized changes that Netflix made during the year helped forecast the growth of the steaming content portion of the business. They began to move to a wider variety of media by offering their service through popular gaming consoles, like the Wii and PlayStation Network, and tablets, most notably the iPad. Also by expanding their territory to Canada, Netflix began to become a global company. In 2010 Netflix was able to ride the wave of your popular DVD rental business, which allowed them the opportunity to look at expanding and preparing their streaming content. Being the number one, and practically only key company in this market helped them become a thriving business. As other rental companies, such as Blockbuster, failed to adapt, they were forced to close stores leading to a higher demand for an easy way to rent movies. These numbers and the trend of the company would set the stage for a booming first half of 2011.

Riding the Wave of Streaming ContentFollowing the promising year Netflix had in 2010, the company was well situated to become a force to be reckoned with in the coming year. They did anything but disappoint, at least in the first two quarters that is. Netflix opened the first half of the 2011 with a strong presence. In the first quarter alone, Netflix added roughly 45.5% to the number of subscribers they had gained in the entire year of 2010. This increased customer base could be attributed to the large investment the company...

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...reputation. Netflix, blockbuster, iTunes, Hulu, and many more are among the competitors. They send Blockbuster, Movie gallery and its associated stores to bankruptcy and it even ended with companies closing doors for good.
Google announced their abilities of Google TV. This let households combine their regular TV experience while accessing music, videos, and photos anywhere on the internet. Hulu who was owned by NBC Universal was also a free online video service that offered TV shows, movies from a few cable networks and movie studios. Also offering a larger library as Netflix offered it customers by purchasing plans. The concept was based on promoting “TV everywhere”, having such devices ad iPad, iPod, or smartphones with wifi capability you could watch TV practically anywhere. Changes in 2009 technology required all TV stations to use digital technology.
Promotion is very important between these rivals when you are trying to promote in a highly competitive environment. For instance, Netflix free trials that the company took to make a new tactics paid off for the company. Redbox and Blockbuster put kiosks at every street corner that you could think of to attract customers.
* Price is one of the biggest attractions that a company has to bring consumers to its company. A way that Netflix brought that was giving potential customers 30 day free trials of instant shows, movies, as well as DVD’s shipped to your...

...Netflix: Planning
Netflix Current Strategy
Netflix Inc. is the largest video subscription service in the United States. Currently having over 25 million global subscribers (Netflix.com, Q2 11 Letter to shareholders), the company’s clientele is up by 70% from 15 million just last year. By examining Netflix’s management, three important questions can be raised in the effectiveness of company’s business strategy. First, what is their mission and vision and how do they affect the company’s planning (strategic and tactical)? Second, what are the company’s objectives and how is the current strategy accomplishing their objective? Third, what is the company’s strategic advantage and how productive is it?
Netflix Strategy
Netflix overall strategy is to provide their customers with a convenient alternative to renting and watching movies. Reed Hastings, CEO of Netflix states the company’s mission statement as, “our appeal and success are built on the most expansive selection of DVDs; an easy way to choose movies; and fast, free delivery “(Brill, 2003), this statement is truly the foundation for what this company has become today. With an ever-growing gradient of subscribers, Netflix has definitely made an impressive mark by not only selling online movie rentals, but also by strategically providing streaming content (watching movies or shows online) on their website....

...Netflix Analysis
Industry Analysis
Being the first company to enter the online DVD rental market, Netflix has been able to attract quite a following. Though their major competitor, Blockbuster, is somewhat a household name, its delayed entrance into the online market has really put them at a disadvantage in competing with Netflix. However, in order to specifically analyze the online DVD rental industry, we consider the Porter’s Competitive Forces Model (Appendix 1). One of the major forces for Netflix is its rivalry. Blockbuster has recently lowered its prices to match the Netflix plans. Because of this, Netflix needs to build a plan of action that differentiates its product above and beyond price. With that understanding, the company will have to prove customers that Netflix is more beneficial than its major competitor, Blockbuster. Netflix’s buyers are another key force to analyze. Since Netflix provides service directly to subscribers, these customers have the ability to put the firm under pressure. Customers are sensitive to price change, so a plan involving an increase in price, even for a short period of time, should not be considered. Additionally, an important aspect for Netflix is the amount of information they have on their buyers. Through consumer profiles and Netflix blogs, the company understands a consumer’s...

...Case Study:
SWOT Analysis of Netflix
By: Ashley Avallone
Executive Summary
Netflix started as an online based movie rental service in 1999 when it was created by founder Reed Hastings, the current CEO of the company. Hastings’ goal for the company was to be “the world’s best Internet movie service provider and to deliver a growing subscriber base and earnings per share every year” (Thompson, C-92). The company has been able to become a leader in the movie rental and streaming industry for several reasons. Netflix was an early entrant to the industry and has been able to build an extensive subscriber base due to aggressive promoting and advertising of the brand, exclusive contracts with movie suppliers, and their superior customer service and knowledge.
Netflix has used a subscription based model that has proved lucrative for the firm. Subscribers can choose from eight unlimited plans at various price points so they are within their budget. The company targets three main customers; those interested in the convenience of home delivery, bargain hunters, and movie enthusiasts. By knowing their target clientele, Netflix has been able to create and effectively deliver their services to become an industry leader. The company became public in 2002 and since then its revenue rose to an 2.6 billion dollars in 2012 (Statista RRS). Stock prices for the company from the early 2000s...

...new release, how can Netflix take advantages of the information in making the ordering decision? How might customer information be valuable to the film studios? What would you suggest to Netflix on using information to manage its customer relationship, as well as studio relationship?
With the information from customers about viewing habits, rating, and preferences, the CineMatch would automatically recommend movies for customers, from which customers could pick what they like. In this way, the demand for new releases would decreases to make Netflix to reduce the high demand for new movies. For film studios, customers’ feedback let them know what customers’ tastes are and how they think about the films. To manage its customer relationship, Netflix could use the information to give recommendation, and know what is needed now and avoid the situation of that movies are out of stock. For the studio relationship, it helps studios know the feedback, majority audiences and ratings based on the information. Also, it leads to better future films for studios according to taking the feedback
In a recent article about the Netflix business model, the following statement was made: “Boutique movie studios like IFC films, which released last year’s critical hit Y Tu Mama Tambien love Netflix because it provides a huge market for movies that can’t muster a widespread theatrical release, as well as...

...Netflix is an e-commerce company that allows their company and customer’s the opportunity to form a good relationship by selling their products and services via the internet. Also it provides its customers the convenience of movie or show rental service from their homes. For the most part this type of business is considered business to consumer e-commerce. E-commerce provides a significant purpose for Netflix. Customers are provided with goods and services, an example of this is when a customer orders a movie and has it delivered by mail that customer doesn’t even have to step outside their door until they get the movie out of their mailbox. On the other hand customers can order a movie and have it streamed through their internet connection. Now that’s definitely what I call convenient. Having an effective e-commerce service is a very significant tool in attracting customers.
Netflix is a subscription based movie and T.V. show rental service. Netflix originally began as an online version of a pay per rental model. Since then it has built a reputation of flat fee unlimited movie and T.V. rentals that didn’t have a due date or late fees. An additional service of Netflix that has since been added is video streaming. Originally video streaming came with no additional charge for regular subscribers. Unfortunately, only selected items are available for streaming.
Netflix only offers a portion...